• Changes in health insurance premiums and deductibles since 2003

    The Commonwealth Fund has released a report on how health insurance premiums and deductibles have changed from 2003 to 2010. It’s somewhat frightening. It turns out that the cost of insurer based health insurance have risen three times faster than wages since the beginning of the decade:

    The average premium for employer-based family coverage was$13,871 in2010, with about a third of sates averaging more than $14,000 a year. Florida, New Hampshire, and the District of Columbia averaged more than$15,000 a year. Think about that. It’s a ton of money.

    Moreover, that’s just the premiums. Deductibles have been going up, too:

    Over the seven year period, deductibles increased from 83% to 106%. Did your salary go up that much? No? Neither did most people’s.

    One more scary slide:

    By 2010, more than 60% of people lived in areas where insurance premiums cost at least 20% of their income. And that’s just premiums; it doesn’t include deductibles, it doesn’t include co-pays, and it doesn’t include co-insurance.

    This is likely unsustainable. The growth rate of insurance is far above that of wages, meaning that health care costs are going to consume a higher and higher percent of people’s incomes in the future. Moreover, this is a problem of the non-elderly. Because of Medicare, few elderly have premiums which consume this level of income.

    • -Seems like a good time to invoke Herb Stein:

      “If something cannot go on forever, it will stop.”

      -Interesting overlap between the Dartmouth Altas’s high/quality, low cost regions and the low(er) premium increase regions. Seems it’d be possible to determine how much of the differentials in premium increases are being driven by the underlying health of the insured population vs price increases. Variable policy regimes make this difficult, but it should be possible.

      -Rising deductibles should make it possible to ascertain the effect of increased cost sharing on utilization and premium growth. Early results are consistent with the original Rand study.

    • While there is a clear issue here, “Exhibit 2” above exaggerates it.

      This graph compares the average premium cost of ESI (which primarily matters to those households who have ESI) with median household income of ALL under-65 households. If you tried to make a more apt comparison by factoring out the incomes of under-65 households that are covered under Medicaid, Medicare (via ESRD or disability), or other types of government-assisted insurance programs, the median income would be much higher and the average premium cost as a percentage of that median income would be a lot lower.

    • The HSA minimum deductible for 2012 is $1200 single, $2400 married. In another year or two, we’ll be there naturally in the employer-provided space.

      Premiums are, on average, 30% lower than first-dollar insurance.

      We may be living on the edge of an HSA world in the employer-provided space and not even know it. If employers can take their existing high deductibles and create an HSA benefit to make it better, we’re going to have quite a lot of market penetration from these products.